Part one

"Soft systems methodology is an approach for tackling problematical, messy

situations of all kinds" (Checkland, 1989). It involves using an organized way of
thinking to improve systems within an organization (Lame et al, 2019). This method
will identify, explain, and solve problems that Primark may face if they decide to go
hybrid. First, theories relating to operations will be used to evaluate Primark's current
operations and processes.

Operations management is defined by Slack and Brandon-Jones (2019 p.5) as "the

activity of managing the resources that create and deliver services and products"
Effective operations management is key to a business, as if done correctly, it can
improve efficiency and customer service concurrently (Slack and Brandon-Jones,
2019). The essential components that Primark incorporates into their business to
ensure their operations are managed effectively and create value for customers are
cost minimalization, quality, capacity planning, facilities layout/location, and inventory
management (Slack and Brandon-Jones, 2019).

Primark's operations involve ensuring quality and value for money through robust
testing procedures and a lean operations system with a "state of the art
infrastructure" (Companies house, 2019). In implementing this strict strategy,
Primark ensures that cost savings can be passed onto customers (Companies
house, 2019). Therefore, increasing the value offered and competitiveness in the
market for Primark (Slack and Brandon-Jones, 2019).

When looking at operations management, one fundamental theory is the five

operational performance objectives: cost, quality, dependability, speed, and flexibility
(Slack and Brandon-Jones, 2019). Cost is an essential part of Primark's operations
and value proposition. Primark keeps prices and costs low by selling private brands
and outsourcing their production lines to countries such as India, where labour costs
are significantly lower (Arriaga et al, 2017). This cost-saving approach is supported
on the Primark (2020a) website, which states that Primark does not own any
factories. Another cost-saving for Primark's operations is seen by their products
having limited anti-theft devices (Arriaga et al, 2017). As stated in Slack and
Brandon-Jones (2019), excelling in one of the five objectives helps a business
compete with competitors, which Primark does when concerning cost.

When looking at the four V's of operations, volume, variety, visibility, and variation
(Slack and Brandon-Jones, 2019), Primark uses their scale quantities to purchase
high volumes to lower costs on products from suppliers (Companies house 2019).
This practice also relates to the value chain theory mentioned in Dudovskiy (2016),
as quantities of scale can be seen as Primark's central value creation. Concerning
the visibility of the four V's (Slack and Brandon-Jones, 2019), Primark's visibility is
low as they spend little on advertising to keep costs down (Primark, 2020a). When
referring to Mintzberg et al (2020) five P's, plan, pattern, position, perspective, and
ploy, the savings mentioned above allow Primark to position themselves as one the
cheapest sellers in the retail industry.

One negative for Primark of having this reliance on providing the lowest cost is that
they have had a substandard ethical reputation surrounding their past operations
(Jones et al, 2009). Primark is trying to combat this negative reputation with their
ethical training initiative, which means they are now selective about their suppliers
(Primark, 2020a). Baram (2019) states that of the individuals who took part, 57%
said that they try and make more ethical fashion purchases from the previous year.
To combat this growing change in attitudes, Primark has launched a new wellness
collection made purely from sustainable goods (Associated British Foods, 2020).
This launch relates to Mintzbergs et al (2020) five P's plan, pattern, position,
perspective, and ploy. Primark uses its wellness collection as a ploy to help address
H&M's change in strategy of only using sustainable goods by 2030 (Morgan, 2020).

Primark's business model is built around achieving high sales volumes (Companies
house, 2019). Primark needs to ensure customers buy in volume to achieve the
desired levels of profitability (Arriaga et al, 2017). Primark's facilities help ensure
that: they accommodate the need for high volumes, compete with rivals to win sales,
and create value for customers. Primark's stores are of a substantial size to allow for
larger volume deliveries and encourage shoppers to purchase more when visiting
(Arriaga et al, 2017). Primark entices customers to purchase in volume by creating a
positive in-store experience (Companies house, 2019). A recent opening that
highlights this successful strategy is the Birmingham city centre store (Hinsliff, 2019).
The store is 160,000 square foot (Associated British foods, 2019) and houses a
blow-dry bar, beauty salon, and a Disney themed café (Hinsliff, 2019). Primark's in-
store facilities mean that customers can spend longer at a store, increasing sales
volumes, and improving their overall experience (Companies house, 2019).
Kraaijenbrink (2019) refers to this as the "kid in a candy store feeling" and states that
this is essentially Primark's value proposition to customers. However, to keep
achieving this outcome, Primark needs to continuously update stores through
various methods to keep enticing and exciting customers (Companies house, 2019).
The continuous updating means that Primark will need to frequently invest time and
cash to ensure stores are new and trendy, which is costly.

Quality is a crucial objective for Primark. Slack and Brandon-Jones (2019 p.48)
explain quality as "consistent conformance to customer's expectations." Primark
achieves high-quality standards by having a continuous testing procedure at each
supply chain phase (Companies house, 2019). However, while Primark state they
offer quality (Primark, 2020b), according to Apeagyei et al (2013), to achieve their
low prices, they use cheaper materials and construction methods in their production
than rivals M&S and Zara resulting in lower product longevity. Having stated this,
Primark's customers are more concerned about buying fashion trends for minimal
prices and care less about the product's quality (Apeagyei et al, 2013).

Nevertheless, with Primark's low prices, their value proposition to the customer is
that their goods are value for money (Kraaijenbrink, 2019). Therefore, this
proposition satisfies their customer's expectations and ensures the quality objective
mentioned in Slack and Brandon-Jones (2019) is met. As mentioned previously,
Primark keeps product labelling and security to a minimum (Arriaga et al, 2017). This
choice results in fewer stages that a product has to go through before it is on a shop
floor. A benefit of having a reduced number of production stages is that there is a
lower chance of mistakes, which results in overall higher quality and efficiency (Slack
and Brandon-Jones, 2019).

Primark keeps up to date with fashion trends in the retail industry; this is done by
having high flexibility and speed (Slack and Brandon-Jones, 2019). Primark keeps
flexibility high by employing experienced teams to examine seasonal trends and
working with trusted suppliers (Associated British Foods, 2020). An example of
Primark's speed and flexibility is their six-week design to shop floor lead time
(Associated British Foods, 2019). This short lead time ensures that Primark can
satisfy desired volume levels and adapt to trends (Associated British foods, 2020).
Also, Primark's partnerships with brands such as Netflix and Disney ensure that they
have access to licensed merchandise to keep up with trends (Associated British
Foods, 2020). As stated in MacCarthy and Jayarathne (2010), Primark's inventory
management and receptive global supply chain have been key enablers for
Primark's high speed and flexibility, with Primark being able to monitor all stock in
stores hourly and alter production mid-season. Primark's supply chain speed is seen
as their suppliers package their items so that they are ready to go straight onto the
shop floor, thus improving efficiency and keep in line with their lean operations model
(Primark 2020a).

While Primark mainly focuses on a lean operation (companies house, 2019), rivals
Zara is using a more agile supply chain method (Madhani, 2015). This method does
not just focus on having nominal costs, like the lean counterpart, but incorporates the
need for reacting quickly to market trends and demands (Madhani, 2015).

Primark has eight warehouse distribution centres in the United Kingdom that ensure
that stock can be coordinated, stored, and moved around effectively (Primark,
2020c). Suppose a business such as Primark was not flexible. In that case, it could
result in a missed trend/ selling opportunity, leading to forced price reductions and
higher inventory costs resulting in less profitability (Madhani, 2015). However,
Primark is not entirely flexible as they ordered stock for summer 2020 equating to
£370 million and could not sell it due to covid-19 and not having an e-commerce side
(Associated British Foods, 2020).

Primark's significant gaps are: the business not being hybrid and being viewed as
unethical/unsustainable by the public. In recent months, Primark not being hybrid
has affected them more significantly, as the Coivd-19 pandemic has meant that, for
months, Primark could not sell any products, resulting in a sales loss of £2 billion
worldwide (Associated British Foods, 2020). Primark's competitors, such as Next and
Zara, are prominent in the online market, with Next being the leader with online
annual sales of £1.2 billion in 2018 (Sabanoglu, 2020a). Sender (2020) states that
the online clothing and accessories market has increased by 26% in 2020, making
the total online market in the UK worth £24.5 billion. Lord Wolfson, chief executive of
Primark's rival Next, believes there has been a permanent shift to online shopping in
the retail industry due to the covid-19 pandemic (Jack, 2020). Primark's need for
hybrid operations can also be supported by data from the office for national statistics
(2020), which shows that internet sales as a percentage of total retail sales have
continually increased since 2007.

In a previous statement in 2014, British Associated Foods (Primark's parent

company) finance chief John Bason explained Primark's decision to not sell products
online by simply saying "it doesn't work at a lower price point" (Andrews and Forsey,
2020). While there are problems for Primark delivering to the door and maintaining a
low selling price, there are methods that Primark could adopt to help them become a
hybrid business.

Primark could offer online delivery exclusively on their new wellness collection
(Associated British Foods, 2020). While these products are still at lower price points
(Associated British Foods, 2020), Primark could gradually increase the range of
goods offered in the collection to allow for a gradual price increase. This increase in
variety could be achieved through collaborating with recognized ethical fashion
brands such as Lucy & Yak and House of Sunny (Wilkinson, 2020). As stated in
Slack and Brandon-Jones (2019), the increase in variety would allow a business
such as Primark to more successfully match customer needs and, therefore, satisfy
them, potentially increasing sales and profitability. This strategy would also negate
the previously mentioned price point issue in Andrews and Forsey (2020). The
increased prices would potentially not be an issue, as customers are becoming more
aware of purchasing sustainable goods and are willing to pay a higher fee for them
(Shahbandeh, 2020). This method would also enhance the previously mentioned
ploy adapted from Mintzberg et al (2020) and allow Primark to more successfully
combat H&M's pledge of only using sustainable goods by 2030 (Morgan, 2020).
However, Baram (2020) states that due to covid-19 pandemic, consumers are
temporarily buying cheaper/less sustainable clothing.

Consequently, Primark may want to utilize this strategy more in 2-4 years because
sustainable attitudes will potentially rebound by 2022 and continue to grow (Baram,
2020). Moreover, offering delivery exclusively on the wellness collection would help
reduce the new system's risk of overloading and improve customer experience. By
adopting this method, Primark would be moving towards a strategy similar to H&M
(Morgan, 2020); while keeping their USP of low prices on the less sustainable goods
(Companies house, 2019). Also, by implementing this method, Primark would
improve their damaged ethical reputation mentioned in Jones et al (2009).

On the other hand, Primark could offer their lower-priced goods online with a
minimum purchase price or delivery fee, as seen on Zara (2020). This specific
delivery fee would ensure that it is profitable for Primark to offer deliveries. This
policy would help negate the effects of having a low price point mentioned by John
Bason in Andrews and Forsey (2020).

Primark could offer customers a free click and collect scheme, as seen on the Zara
(2020) website. This scheme would ensure that delivery fees are negated as
customers have to collect an order from Primark in person. Using this method,
Primark would have a chance to entice customers to browse stores, and therefore,
they can utilize the previously mentioned "kid and candy store feeling," which is a
part of their USP. (Kraaijenbrink, 2019). One negative of using this method is that
most of Primark's large stores are located in city centres (Associated British Foods,
2020). So, customers would have to travel into highly congested areas to collect
orders, which could cause stress and leave them dissatisfied. Also, if another
pandemic occurred, the click and collect system would potentially be forced to close,
thus making the new process void.

Eventually, Primark will need to adopt a delivery system as more customers are
continuing to order items to their house due to aspects such as covid-19 (Carroll,
2020). Ultimately, Primark should own the delivery system to exclusively offer online
delivery on sustainable items, with a delivery fee similar to Zara and H&M of £3.95
and above (Zara, 2020; H&M, 2020). Primark will also have to consider the "parcel
conundrum" mentioned in Bomford (2012). Bomford (2012) states the problems with
delivering to doors are: missed deliveries and customers wanting increased visibility
with their orders, which both incur costs. Primark may have to consider partnerships
with delivery companies such as DPD, known for their sustainable delivery methods,
such as using electric cars (DPD, 2020). This partnership will increase costs to
Primark as DPD will not deliver for free. However, Primark could use their scale
quantities mentioned in Companies house (2019) to potentially reduce the cost
incurred and, therefore, make a beneficial partnership. The alliance would bridge the
gap in sustainable delivery operations. This report will take the home delivery
method into part two, where the report will use soft systems methodology to re-
design the process.
 Part two

Rich picture
Root definition

A Primark owned system to deliver products from their wellness collection. By means
of suitable transport. In order to improve market share through having a hybrid
method of retailing.

CATWOE table

Customer Consumers who want to shop sustainably online

Actors IT department to establish a new system. Sales department to
process payments from customers. Delivery department to
ensure successful delivery of products. Administration
department to continuously monitor the new system to ensure it
is running effectively. Returns department to process the
returns of unsatisfied customers.
Transformation Cost of training employees and other infrastructure costs
incurred to ensure the system is running efficiently and
effectively.
Weltanschauung The new system will improve the sustainability reputation of the
business and enhance customer satisfaction through
convenience. The new system will improve the revenue of the
business and therefore market share.
Owner Primark
Environment GDPR and government laws will need to be adhered to when
launching the new system. Primark will need to consider the
parcel conundrum and keep up-to-date with sustainability
practices in regards to delivery methods.
As is

This is Primark's as is process. It involves a customer traveling to a Primark store

and purchasing products from the wellness collection, licensed merchandise product
line, and Private production line. An example of a product from the licensed
merchandised production line is Disney themed products.

To be

This is Primark's proposed to be process. This involves no traveling for the customer
as they can order online products exclusively from the wellness collection that will be
delivered to their addresses. The Administration Department handles the order
request, while the warehouse distribution centres load the transports and compose
orders.
 Part three

Primark's key performance objectives for the new process are sales revenue, market
share, amount of returns, and employee turnover. These objectives will help Primark
understand if the new process is performing effectively and efficiently. Primark
managers should consider the five performance objectives cost, quality, speed,
dependability, and flexibility explained in Slack and Brandon-Jones (2019) when
implementing the new hybrid process.

When looking at the cost, the new process will see an increase in Primark's
expenses. This increase is due to the cost of implementing the new system and
training employees to execute the new process competently. A similar initiative from
Morrison's in 2014 saw expenditure, at its peak, increase by 50%, which was £550
million (Morrisons, 2014). As Primark will be exclusively offering delivery on the
wellness collection outlined in Associated British Foods (2020), peak expenditure will
be relatively lower than Morrison's amount. So, Primark's estimated peak
expenditure will be estimated to be around the figure of £300-400 million. Offering
delivery will permanently increase Primark's overall operating cost as they have
expanded into the online marketplace. However, the expenses that occur will be
negated by an increased market share from operating online.

Quality will need to be consistently high as prices will be more than the usual amount
when customers shop in-store. Managers will ensure a rigorous checking procedure
takes place before items are sent out to customers. The rigorous checking procedure
should be adapting from the current testing procedure mentioned in Companies
house (2019). This procedure will help reduce the risk of faulty items and therefore
keep return levels low.

Dependability will be an essential aspect that needs to be considered by managers

when operating the new process. Hope (2018) shows the problem when goods are
not dependable and do not meet customer expectations. Aspects that contribute to
high returns are the items not fitting as well as the customer expected, the items not
looking like the online picture, and the colour of the items or disappointing material
customers (Hope, 2018). As seen with Asos, an item's dependability is vital as
returns reduce profits (BBC News, 2019). Primark managers will have to consider
return policies and ensure they are not too lenient and do not allow customers to
exploit the system like with the Asos design (Adams, 2019).

Managers at Primark will need to allow the customer to choose a delivery day and a
time slot, as seen with rivals H&M (2020). Therefore, the new process will have to
have a considerable amount of flexibility and speed to ensure deadlines are met.
Bomford (2012) states a common criticism with deliveries is the vague delivery
times. So, Primark managers have to ensure that offered time slots are relatively
precise to ensure customer satisfaction is not negatively affected. A method that
effectively improves visibility for customers is a delivery notification system (Bomford,
2012). This system involves sending a text or email when the order is close to the
customer (Bomford, 2012). Thus, Primark managers have to establish a notification
system similar enhance customer satisfaction.

Primark should develop an in-house management system for the new process rather
than outsource. While outsourcing management can allow a business to focus on
other strategic aspects and free up time, it can lead to decreased employee morale
and autonomy (Belcourt, 2006). So, ultimately the needed investment in
infrastructure is a necessary expense when implementing an in-house management
system.

Primark's managers could see an opposition to change when trying to implement the
new hybrid process. Employees in an organization often resist change due to
cynicism, fear, preconceptions, and assumptions surrounding the new process
(Sohmen, 2016). Employees are often scared of the unfamiliar and of failing
(Sohmen, 2016). This reluctance might see potential job losses. As Bhatt (2020)
stated, resistances can be minimized through an effective change management
system. Bhatt (2020) concludes that to successfully manage and continue a change,
the change management system must have proper effective communication with
employees and constant evaluation. So, Primark managers will have to establish a
change management system is in place with these qualities to ensure that the hybrid
process is effective.
 Primark balanced scorecard

Financial perspective

Objectives Measures Targets Initiatives

To increase sales By contrasting An increase in By ensuring the
revenue previous sales sales revenue of product line is the
revenue results. 12% (£413.92 most sustainable,
The 2019 result million) in the first affordable, and
was £3,449.3 year of launching fashionable items
million the new hybrid on the online
(Companies process. marketplace.
house, 2019).
To have a healthy By evaluating the To have a gross By implementing a
gross profit cost of sales and profit margin of lean system of
margin on the revenue from the 20% after one year operations, to
hybrid system hybrid process. of the hybrid reduce costs.
system being live.
To provide an By looking at the To accomplish By increasing
increase in return level of dividends high sales to raise business sales
on investment to paid from the the value of through offering
shareholders in previous year. Primark. products online, to
the form of enable growth.
dividends

The 12% revenue increase figure is contrived from Sabanoglu (2020b), which shows
next online sales on launching in 2009 was £873 million. The figure is lower than the
Next amount because Primark will be launching exclusively with the wellness
collection and therefore not have a wide variety of choices at the start of the new
hybrid process. Primark's gross profit figure for 2019 was 19.8% (Companies house,
2019). Therefore, Primark should aim for a gross profit margin of 20% for online
sales.
Customer perspective

Objectives Measures Targets Initiatives

To see an By conducting To see an By offering quality
increase in online and in-store increase in overall products and
customer surveys. customer service to
satisfaction satisfaction from customers who
previous years. shop with Primark.
To see a By analysing To cut average Keeping systems
decrease in monitoring delivery time by up-to-date to track
average delivery average delivery 10% by two years. congestion and
times times opening more
distribution centres
across the UK.
Investing in the
latest vehicles and
mode of
transports.
To keep returns By consistently To consistently Making sure items
consistently low monitoring the keep the level of delivered to
number of returns returns below 5% customers are not
made. of total sales. faulty and are in
the correct order.
Ensuring pictures
of items on selling
platforms are
accurate.
To see an By analysing the To increase the By continually
increase in the number of repeat amount of repeat keeping up to date
number of repeat purchases. online purchases with fashion trends
purchases by 25% by two and meeting
years. customer
expectations.
By decreasing the delivery times, increasing the repeat purchases by 25% in 2
years, and keeping returns consistently low, Primark will improve customer
experience and, therefore, increase the new product's financial success. The above-
mentioned returns level of below 5% of total sales are crucial as seen with Asos as
high returns damage the financial success of a business (BBC News, 2019).

Internal business perspective

Objectives Measures Targets Initiatives

To Improve Continually audit To have a Rewarding
Primark's ethical and check items decrease in suppliers who
and sustainable from suppliers environmental continuously show
reputation fines from the an excellent
To check and previous year's ethical and
monitor the result of £51,000 sustainability
business's carbon (16 fines) record.
footprint. (Associated British
Foods, 2020).

To have an
increase in the
previous figure of
6952 supplier
training hours
(Associated British
Foods, 2020).
Increase the Check products To have an Rewarding the
variety of online created and increase of 100 design team when
products offered offered on products after one they have created
Primark's online year. a successful
selling platforms. product line.
To reduce the To analyse the To reduce the Investing and
number of number of number of defects reviewing
 defective defective products by 5% after one production/
products monthly. year. delivery methods
and continually
discussing how to
improve them.

In terms of the internal business perspective goals, as stated in Slack and Brandon-
Jones (2019), increasing the variety of products and offering quality items and
service allows a business to meet customer needs more successfully. Meeting
customer needs will allow Primark to improve the customer experience and meet the
financial perspective's sales goals. By reducing the defect rate by 5%, Primark would
help reduce costs and help meet the financial perspective's gross margin.

Learning and growth perspective

Objectives Measures Targets Initiatives

To increase the By comparing the To guarantee To allow for
amount of time number of hours employees pass employees to resit
spent on spent training training initiatives training
employee employees from with a minimum programmes as
training the previous year. score of 90% and much as possible
above. and create a
pleasant learning
environment.
To improve By conducting To improve To ensure
employee employee surveys employee employees are
satisfaction and conducting satisfaction from well listened to
employees and the previous year's and feel like their
line manager result. feelings and
meetings. opinions are taken
To implement at on board.
least one
 employee
suggestion a year.
To reduce Comparing the To reduce By offering safe
employee previous year's employee turnover working
turnover rate employee turnover from the previous environments.
result. year result. Also, offering
opportunities for
employees to
progress and
better themselves.

Primark employees' learning and growth are vital as employees are crucial in the
new system's success. The training initiative will help reduce employee fears and
reduce the change's impact on employee satisfaction (Bhatt, 2020). The initiative will
help reduce the employee turnover rate and reduce the cost incurred from training
new employees in the basics. Overall, meeting the learning and growth goals will
help employees implement and run the new process successfully, which will help
Primark meet financial goals and gain market share.

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